‘Real Estate Is Cyclical’: NAR Economist
Lots of predictions out today. “U.S. home sales will drop in 2006 as mortgage rates climb and house prices inch up at rates far below those notched last year, a trade group said on Tuesday, noting the long-awaited housing slowdown has begun. The outlook from the NAR came shortly after luxury home builder Toll Brothers Inc., widely seen as a bellwether for the housing market, slashed its sales forecast for the second time in three months.”
“‘Sometimes people lose sight of the fact that real estate is cyclical,’ the realtors’ chief economist, David Lereah, said. Construction too will tumble to levels not seen since before 2004, Lereah said. He forecast 2006 housing starts at 1.87 million units, down 9.3 percent from the 2.06 million in 2005.”
“Sales of new homes should fall as well, down 8.5 percent to 1.17 million units from a 2005 record of 1.28 million, Lereah said.”
“Gary Shilling, the Sage of Springfield, noted economist and contrarian..writing in Forbes, forecasts, are you sitting down? that ‘the current housing weakness will develop into a full-scale rout.’”
“He goes on: ‘Median home prices need to fall 29 percent to return to their normal relationship with rents and 35 percent to relink with the Consumer Price Index.’ Finally, some good news: He’s predicting only a 20 percent decline in house prices.”
The New York post. “Homeowners in the New York area should brace themselves for more bad news in 2006, with lower sales prices. The city’s metropolitan housing market, including nearby suburbs in New Jersey and Westchester County, will experience a 2.3 percent price dip this year, according to a major mortgage lending company.”
“Other areas in the tri-state region expected to cool off include Nassau/Suffolk counties, with a median home price of $410,000, showing a 4.5 percent fall; Connecticut’s Bridgeport/Stamford area, with a median price of $490,000, cooling off by 1 percentage point.”
“In New York City, Mayor Michael Bloomberg predicts an even more dismal scenario for his constituents. The mayor’s numbers crunchers expect home prices in Gotham to dive 10 percent, while sales of homes will fall 14 percent in the next few years.”
Of course it’s easy to predict a fall with news like this about. “This Saturday is your chance to buy a Centex Home in almost any Centex Sacramento area neighborhood and save $50,000 to $150,000 on selected homes. New construction or one of our ready-to-move-in homes, it doesn’t matter.”
Thanks to the readers who sent in these links.
“Gary Shilling, the Sage of Springfield, noted economist and contrarian..writing in Forbes, forecasts, are you sitting down? that ‘the current housing weakness will develop into a full-scale rout.’”
“He goes on: ‘Median home prices need to fall 29 percent to return to their normal relationship with rents and 35 percent to relink with the Consumer Price Index.’ Finally, some good news: He’s predicting only a 20 percent decline in house prices.”
Is he talking about the US or his geographical area of Springfield? I like the description of a full-scal rout.
“‘Sometimes people lose sight of the fact that real estate is cyclical,’ the realtors’ chief economist, David Lereah, said…..”
Man, that Lereah called it right all along. What a prophet, what a genius he is!!!!
If that 20% is for teh entire US, image the shaving that bubblelicious like New England, NY, FL, AZ, and CA are going to get…. More like 60-70%?
Lereah and his protege have finally succeeded in destroying any credibility the NAR had left..
…But, but, wait! Real estate only goes up, right?
No one ever told me RE was cyclical.
those are some funny numbers…..2.3% decline in 06?…I think NJ has already experience a 2.3% decline..how long would it take to achive a 30% correction as suggested. This think aint dragging out for 5-10 years..
they’ve already fallen
slower rate of increase ”
roflow
why do they still offer hope of an increase in prices ?
is it not David Lereah and NAR that kept on saying that real estate will go up 4-5% at least?
Now he is saying real estate needs to come down. What a change in opinion.
“‘Real Estate Is Cyclical’: NAR Economist”
Oh.
I look for a fall of 50% in Palm Beach County. Deflation is on the way. But then again times have never been better! If you are a saver.
I wonder what Laresh is going to say to all the FB’s that followed his ‘advice’ over the years.
“but the head dude at the NAR said that property would go UP 5-6% this year?!?!?”
These people would say anything to make a buck!
SoCalMtgGuy
Another F@CKED Borrower
FB Forums
He mentioned stocks tanking, but with an average eps of around 18 for fotune 500 stocks, as well as companies employing more cost effective work forces overseas, I question whether stocks will tank. Either way I don’t want to put my savings in T-bills.
Nah, the 50-60% haircuts will come in dumps like Houston and Dallas. Places nobody wants to live. I’d be all over any pullback in West L.A., Santa Monica, etc. Those will spring back quickly. JMO
“He goes on: ‘Median home prices need to fall 29 percent to return to their normal relationship with rents and 35 percent to relink with the Consumer Price Index.’ Finally, some good news: He’s predicting only a 20 percent decline in house prices.”
Does that 29 percent take into account the 4% drop that Goldman Sachs economists have already noted since last October (at least according to The Economist magazine’s Feb 4-10th print edition article “The world economy — Testing all engines.”)?
There is also some bad news to report: Even if the decline in house prices is limited to 20% (which sounds conservative to me after seeing 200% appreciation in CA since 1998), that will feel much like a sizable multiple of a 100% drop in net worth to those who leveraged their housing investment portfolios to create a huge exposure to the risk of falling prices.
Not only is RE cyclical, past corrections never stopped at fair value ( long term inflation curve). They are more like sine waves and stayed undervalued as much and as long as the overlaued periods. Around 1995, you could get properties in NYC and LA with positive cash flow ( taxes, HOA, and insurances all factored in). The same thing is going to happen again. Homes that are rented for $2000/month will fall below $300K or even $250K.
I’d be all over any pullback in West L.A., Santa Monica, etc. Those will spring back quickly. JMO
—————————————————————————
JMO you are a wishful thinker. See my post above for the reason.
Whatever. You’re entitled to your opinion. People want to live in those places and there is real money there, not condo flip money. We’ll see.
Read about Home sellers making a leap of faith with St. Joseph statue.
“After their $540,000 house in Prior Lake had been on the market for three slow months, Holly and Sean Ploeger were willing to do anything to sell it.
So in December, they pulled up soil at the base of their For Sale sign and buried a little statue of St. Joseph in a plastic bag upside down and looking away from the house (the direction they want to go).”
Zadok says,
I look for a fall of 50% in Palm Beach County. Deflation is on the way. But then again times have never been better! If you are a saver.
I live in Palm Beach County. What makes you think there will be a 50% decline? I was thinking more like 30%. Don’t get me wrong, if I stay here, I’ll love a 50% drop but that would virtually erase all gains for the last 4 years or so. Florida took off a bit after California. Our condo market could drop 50% as that is a whole different animal.
Well, hasn’t Mr. LIEreah changed his tune! To think, just a year or two ago this was a housing market that had wings and was going to fly away or something like that.
Read about
Our FastMove program can move you up now.
There more reductions goin on. How would you feel if you paid full price
I look for a reversal in Palm Beach and Martin County back to the price levels before the bubble took off. Which would be 99 or 2000 levels. So a condo that is now selling for $180,000 will go back to $90,000. For now I am glad that all the “granite countertop” and “crown molding” signs were blown off the telephone poles and street corners with the last hurricane. Never to be replaced again. They went the way of the “beanie baby” stands of the early 90’s. I’m lookin for the foreclosure signs to be coming next!
“The 50-60% haircuts will come in dumps like Houston and Dallas”
I think the dumps have a built in floor- namely the replacement cost if you discount the land value to near zero. If it becomes cheaper to buy than build new, then it makes sense to buy, and the floor is reached. Sure, you might overshoot a bit on a correction, but I think that the structure replacement cost (just think $$/sqft) is a pretty safe entry point.
Play that game on the coasts though, where building costs are roughtly the same, and you can see that there is a ton of risk. The 2X4’s and sheetrock aren’t what’s being speculated on; it’s the dirt they’re sitting on. If the speculative market for this dirt collapses, then there is a potential for huge losses.
# TXchick57 Says:
February 7th, 2006 at 12:00 pm
Whatever. You’re entitled to your opinion. People want to live in those places and there is real money there, not condo flip money. We’ll see.
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Thanks for the reminder — CA real estate always goes up since everyone wants to live here.
If the speculative market for this dirt collapses, then there is a potential for huge losses.
———————————————————————–
So what you are saying is that at the end of the day, CA McMansions will be, well, dirt-cheap?
“Well, hasn’t Mr. LIEreah changed his tune! To think, just a year or two ago this was a housing market that had wings and was going to fly away or something like that.”
Is it true that he is coming out with a revised version of his book entitled, “Have you prepared yourself for the coming real estate bust?” (Sorry to start urban legends, but I could not stop my fingers from typing that one.)
It seems to me that all the predictions, all the estimates, all the learned guesses prior to ‘the full scale rout’ are useless. It is different this time, folks. The massive personal and public debt overhang, the negative savings rate, a record low jobs production, does not lend itself to glib opinions about the future. We may reinflate this spring; we may soft-land; we may more into difficult recession areas; we may implode like that model of high finance Enron. This uncertainty level alone calls for interest rates to climb til it hurts. My guess is the best thing that could come of this mess are a few million rubes getting financially flattened, and the basic national economy stabilizing at a somewhat lower value. But it is different, so who the really knows? Not me.
GetStucco,
I’m sitting here laughing. Being a native Californian, we’re headed for a bloodbath like no other. California ain’t all that. This is history in the making. They’re trying so hard to soften the blow… it’s not working.
SoCalMtgGuy:
“I wonder what Laresh is going to say to all the FB’s that followed his ‘advice’ over the years.”
Ha Ha Ha! Was that a typo or a David Koresh joke? Good one. Unless it was a typo, then perhaps I have a warped sense of humor.
““‘Real Estate Is Cyclical’”
Even that is overly optimistic, because it implies each down cycle will be followed by a new up cycle.
“Real Estate is beginning a long term downtrend” would be more accurate.
My wife and I want to get into San Clemente, on a hill, overlooking the water. Last recorded sale on a particular street (San Juan) was 1.3M. Several houses have since been sitting for six months plus where the original asking prices were 1.4M+. Now they are down to 1.3M or less, but there they still sit. We’re talking about houses which ten years ago were going for 450K and even at those prices they sat for a while before they sold. I figure we’ll consider getting in at 650ish; but I agree with others that this downturn is going to be far worse than others. Therefore, it’s anyone’s guess as to how low houses in bubble areas can truly sink. We’ll start kicking the tires at 650, but we’ll see how we feel at that time.
Anyone who has been through a RE bust knows that this type of talk is par for the course.
Next, we will have economists calling the bottom all the way down…for years to come. Each report of falling prices will be heralded as the official bottom for the market, and a sure sign that it’s time to scoop up some bargains.
Don’t you kids be fooled. Old men like myself have seen this many times before…but maybe not this severe.
The events that are about to transpire in our economy will be shocking. All of this oversupply and easy credit must work its way out of the system. It will not be a fun ride for those who have bought into the “savings accounts are stupid, and debt is good” crowd.
Read about
Realty Times Outlook: Here We Go Again.
“Google, a fast-growing company has refused to supply guidance for the next quarter.
What does this have to do with real estate? Housing isn’t like stocks. In most cases, homebuyers aren’t paying cash for the full purchase price. They are leveraging their equity with loans. If a stock goes down 10 percent, that’s real money lost, but if a house loses value, it’s almost never overnight and never for as much of a loss.
Realty Times says this. Remember that equity is built over time, and homeowners can build more value into their homes with improvements, repairs and staging. Don’t fall for pundits who want you to buy into fear. Just because you can buy a home with little down, doesn’t mean your house is a poor investment if house prices plateau or loses value in the short term. Your home is your castle. Live in it and enjoy it.”
Puke puke. How can you live in and enjoy a home that has you in debt beyond belief? I think you can easily lose more money in real estate than stocks. Oh I get it… just hang onto long enough and it will eventually go up again. Whew… had me scared for a minute.
Doesn’t he have a book with a cover showing a couple watch as a house rises to the sky?
How about a new book with a cover showing a couple watch as the house burrows itself into the ground? And a headstone that says $0 down purchase in 2005.
Melody…
Ditto. Central Valley born and raised. Redding to Visalia,the Coast Range to the Sierra’s - my gut tells me this is housing Trinity Test Site. The detonation here will leave a truly spectacular hole.
I miss the damn preview button
I will try to read my posts more carefully!!
I THINK Mick Jagger should have been hired for cheerleading this housing fiasco instead of the SUPER BOWL halftime show
This is where you start to see GROWN MEN CRY
I would like to see just one newspaper challenge David Lereah on his continually changing views. One year ago he published: Are You Missing the Real Estate Boom? : The Boom Will Not Bust and Why Property Values Will Continue to Climb Through the End of the Decade - And How to Profit From Them
From the book’s description: “The long-term fundamentals for housing remain strong into the foreseeable future, claims Lereah. Far from a real estate “bubble,” what we are experiencing today is a phenomenon that takes place only once every other generation: a long-term real estate market expansion.”
Why do people even read mainstream media today? While bubble consensus does seem to be growing amongst the newspapers, I still see hacks like Lereah giving their visionary “outlooks” far too often.
Melody,
We’re going to have a fix for that. Just have to find the best plugin.
Ben,
Thanks
tank-it,
The housing bubble has really opened my eyes to the emptiness of mainstream media. There are so many blogs with rich, up to date, intelligent info it’s amazing.
Then I occasionally watch mainstream media and it’s nothing but fluff - a bomb exploded, a girl is missing, Bush says we need to stay the course, a horse has a mark that looks like Jesus, oprah is pissed that I guy lied about a stupid book.
I really don’t blame Leheah. He’s a paid shill, a carny barker in a nice suit. I doubt Madonna’s publisist would point out her gray roots, or her hot flashes. The real shame is that supposedly mainstream news companies treat Lereah comments with all the scrutiny of a TeenFling magazine. Professionally bankrupt morons, following the herd. They don’t give Pulitzer’s to these guys.
“I really don’t blame Leheah. He’s a paid shill, a carny barker in a nice suit. I doubt Madonna’s publisist would point out her gray roots, or her hot flashes. The real shame is that supposedly mainstream news companies treat Lereah comments with all the scrutiny of a TeenFling magazine. Professionally bankrupt morons, following the herd. They don’t give Pulitzer’s to these guys. ”
Ya gotta realize that the mainstream media has one job: To keep the masses calm and unconcerned… and spending.
No US news outlet is concerned with reporting the real news. They merely repeat what they are told through press releases and sound bites. If the White House says the “recovery is coming along”, that’s what Soledad O’Brien tells the soccer moms each morning, and then it’s ok for the soccer moms to go out and spend another $900 of home equity cash at the mall on clothing for little Tanner and Dakota.
# Mr. D Says:
February 7th, 2006 at 12:35 pm
““‘Real Estate Is Cyclical’”
Even that is overly optimistic, because it implies each down cycle will be followed by a new up cycle.
“Real Estate is beginning a long term downtrend” would be more accurate.
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Mr. D. –
Give David L another week or so — he will come around to that statement in due time.
turnoutthelights Says:
February 7th, 2006 at 12:55 pm
I really don’t blame Leheah. He’s a paid shill, a carny barker in a nice suit.
————————————————————
You don’t get to pick your parents, but you do get to pick your employer.
In the City of Miami alone more than 15,000 condos are under construction. http://www.ci.miami.fl.us/Planning/pages/MonthlyDR(Dec2005-Legal).xls
“It is completely unrealistic to believe that all of those units can be absorbed in the next 12 months.” –Economist Henry Fishkind.
Housing market has its ups and downs as we are currently experiencing. Long-term analysis of US housing market will clearly show that appreciation rate tracks general inflation almost perfectly. What has the average inflation rate been for the current housing boom cycle? ~2-3 % annually? The drop in home price will be rather severe, and the economic fallouts will be significant.
I still can’t get over someone paying $400,000 for a house in Bridgeport of all places. I know I’m a broken record.
Is everyone sitting down?
Remember that inventory figure I gave you yesterday?
It jumped just a little bit.
According http://www.ocrealestatefinder.com...
Orange County went from 13,958…
Get this…
To 14,935.
No, that’s not a typo.
Yes, that’s ONE THOUSAND HOMES IN ONE DAY.
The Orange County Inventory Fire just became a white-hot nuclear meltdown, turning the earth to sand-
-scorching the landscape
-setting the trees on fire.
Holy mother of God…
Did anyone just hear that talking head Mike Williams on Bloomberg News… commenting on Toll Stock pretty much hitting bottom today and “we should see a rally for construction stocks, now that the adjustment has been made”- yeah, right… you haven’t seen nuttin’ yet… You Rose Colored Glasses kind of guy.
At least those at Bloomberg are starting to ask the big questions, even though they have to gag on the answers they are given.
Txchick-
I gotta agree with Getstucco, Sant Monica and West L.A. are going to be in for a very rude awakening. Plus there is a significant amount of condo flipping not a lot but significant. last I checked the Condo market in those areas were filling up the MLS fast with astoundingly stupid prices. it’s just a matter of time. Before some overleveraged newbie investor pulls the trigger and sells one of Donald Sterling’s 900k condo’s for 650 just to get out of it.
An interesting tidbit about that Centex ad that was mentioned is at the bottom they mention paying brokers co-op fee’s of 4 to 5% of the sales price looks like they need a little extra help dumping inventory. Funny they were probably one of those builders at the beginning or during the bust that were offering 0 to 1% co-op fee’s my have things in such a little bit of time.
Someone mentioned Jagger and Grown Men Crying. Please not that again. I had enough of that during the last bust.
Ex: My attorney or C.P.A. told me to buy it and it was ok to take a loss because when it appreciated in a year or two I’d make my money back and plus I can write it off on my taxes. Me: Do you have 100k to 200k to bring to the table. Him: No Me: Then I can’t help you Him: But your a realtor can’t you do something .. please please please help me Wah Wah Wah.
It’s amazing how soon they forgot.
Orange County went from 13,958…
Get this…
To 14,935.
No, that’s not a typo
——————————
Gotta be a typo. Inventory does not jump by 7% in one day.
And OC prices will never fall… :->
mrincomestram Says:
February 7th, 2006 at 1:55 pm
Txchick-
You aren’t tipping your hand by those bullish comments, I hope …
As someone who grew up in OC and hates it to the core of my being - That 14,935 is a beautiful number. I remember just a little while back there was an article in the OC register about a record number of delingquents on property taxes. Could people already be selling just in hopes of making those tax payments? And will OC see another BK as a result of the bubble?
Tx Chic Said
“Nah, the 50-60% haircuts will come in dumps like Houston and Dallas. Places nobody wants to live. I’d be all over any pullback in West L.A., Santa Monica, etc. Those will spring back quickly. JMO”
Now don’t get me wrong, there is going to be pain virtually everywhere, but given the median home in Houston is still under $150K and Houston did not enjoy the run-up, a 50-60% haircut is ludicrous. The median home price is not going to slip below $75K in the 4th largest city in the nation. Could it go down… sure. But the median income to median home price is not out of whack in Houston as is the median home price to rent ratio. I think you are overstating for this market.
Davis Renter…
It’s a combination of things- a perfect storm, you might say.
1. The NAR underestimated the number of flippers, who all HAVE TO sell at the same time when prices go down, or level off.
2. Bad loans are adjusting, causing financial pain.
3. Some people actually think they might get that $800,000 for their house. Good luck with that. They’ve now got thousands, not hundreds, of competitors.
4. The Fed is going to continue raising interest rates until all the flippers are dead. Probably twice more.
It’s a perfect storm.
But the Orange County Register won’t tell you that, because that big fat Real Estate pullout pretty much buys the RE industry a newspaper.
Saturday night live in it’s heyday did a sketch called “The death of Socrates” with Steve Martin playing Socrates. The scene opens with Socrates and his disciples waiting to hear the verdict in his trial.
Enter one of his acolytes carrying a cup. He hands the cup to Socrates and says, ” Socrates, here is the hemlock.”
Socrates tosses back the hemlock and asks, “So, what was the verdict?”
“Socrates … the verdict was death.”
“What!!!?? I’ll recant. I’ll apologize, anything.”
“But Socrates … you drank the hemlock.”
“So?”
“Socrates … hemlock is poisonous.”
At which point Steve Martin goes into a 5 minute rant about “Why didn’t anyone ever tell me that hemlock was poisonous???!!! Everyone would ask, Socrates what is the meaning of life? Socrates, what is the nature of man? But did anyone ever say Socrates, hemlock is poisonous. Noooooooooo.”
I had a flashback to this when I saw the NAR quote.
“What??!!! Why didn’t anyone ever tell me that real estate was cyclical!!???”
Auction Heaven in 07-
That is spot on
Auction Heaven,
I saw that OCRealestatefinder number this morning, too, and did a classic spit take.
The big jump does make me wonder whether the site changed its calculating method. Interestingly enough, though, the ZipRealty number (which appears to use a completely different methodology, apparently, since its numbers are consistently much lower than OCRealestatefinder’s) also had a big jump in the last few days.
What I’m waiting for is the day in the middle of February where the OCRegister puts the median house price on its front page, as it has every month for the past half year. The last headline number (December’s median price) was $621,000. Guess what: The newspaper publishes the median price for the past 22 days every Sunday in the interior of the “Your Money” section.
The Sunday before last, the median price was $599,000. Last Sunday, it was $590,000. That takes us back to July or June, and represents a $31,000 drop — i.e. about 5% –since December.
That ought to be an interesting headline in about a week. Keep it up, and I’ll buy the $800,000 house I’m renting for $600,000 in September.
“Nah, the 50-60% haircuts will come in dumps like Houston and Dallas. Places nobody wants to live. I’d be all over any pullback in West L.A., Santa Monica, etc. Those will spring back quickly. JMO ”
Ummm no. I live in LA and I beg to differ. West LA and Santa Monica are EXTREMELY overcrowded and pretty dumpy in most parts too. I still can’t comprehend why so many people find these places desireable. Must be the whole “glamor of LA” thing - what a crock. Or the beach, but big deal - I could live inland about 20 miles and pay half as much and still be at the overcrowded beach in 30 minutes.
I’d pick a big home in a nice subdivision in Houston, or Raleigh, any day over this craphole. I’m only here saving $$ on a fat contract job then I’m outta here baby!
Auction Heaven, you should have been a poet, sounds like something out of Apocalypse Now.
Here’s a little context for new readers of this blog. David Lereah published a book on Feb. 22, 2005 (not even a year ago) entitled:
Are You Missing the Real Estate Boom?: The Boom Will Not Bust and Why Property Values Will Continue to Climb Through the End of the Decade - And How to Profit From Them
The amazon link for the book is here
If he really is a shill (likely) you’d think he’d know to keep his mouth shut about long term predictions. I’ll give him this: he’s got some balls to put out a book with that title when the real estate boom was already looking a little long in the tooth. It’s enough to make me believe he really believes what he’s saying.
At any rate, here’s hoping his will become as famous as Glassman & Hassett’s 2000 book entitled “Dow 36,000: The New Strategy for Profiting From the Coming Rise in the Stock Market”
Thomas,
What I’m waiting for is the day in the middle of February where the OCRegister puts the median house price on its front page, as it has every month for the past half year.
This month I suggest you try page 18, halfway down the rightmost column :lol:.
Maybe we should lay bets on the next median OC home price.
I’ll say it goes down to $575,000, from $590,000.
I might be conservative on that…
As for the difference between zip’s numbers and ocrealestatefinder, I don’t know. The truth is probably somewhere in the middle.
Whatever the case, inventory here in the OC is completely out of control.
It’s fun to watch.
It’s also fun to hear people still babbling on and on about how much their home or homes are worth.
‘Whistling past the graveyard’, as another poster pointed out.
one thing to add on the NAR and David L’s predictions: I can’t find the link at http://www.realtor.org this evening (they probably took it down), but Lereah gave a power point presentation several months ago (I want to say late 2004/early 2005?) that said how great housing was. One page had little houses made out of $100 bills, with wings, flying through the air, if memory serves. The basic message was “Isn’t it great how much money you can make off housing.” What a joke.
If he really is a shill (likely) you’d think he’d know to keep his mouth shut about long term predictions. I’ll give him this: he’s got some balls to put out a book with that title when the real estate boom was already looking a little long in the tooth.
It seems every bubble now has someone who publishes a book like that. THere was one for the stock market as well but now I forget its title.
marinite wrote:
It seems every bubble now has someone who publishes a book like that. THere was one for the stock market as well but now I forget its title.
You may be referring to “DOW 36,000″ by James Glassman (which you can find on Amazon.com) Mr. Glassman now writes a monthly column for Kiplinger’s Magazine, in which he is much less hyperbolic than his pre-crash days… Perhaps after the crash Mr. Lareah cann find a job as a poet, especially considering he authored this phrase:
“… unfortunately the media, I think, has really been carried away with the word ‘froth,’ just like they were with ‘irrational exuberance’ in the stock markets. … I could think of froth as effervescence rather than some popping of bubbles.”
San Francisco Chronicle
Three books for a quick read - DEFLATION by Shilling; THE GREAT BUST AHEAD by D. Arnold; THE COMING CRASH IN THE HOUSING MARKET by J. Talbott. By the way, has the Santa Barbara MLS and Board resumed giving the News Press sales and inventory numbers again???????
Even funnier was Steve’s Martin on last week’s SNL. The skit about the new path to riches: “DON’T BUY ANYTHING YOU CAN’T AFFORD!”
priceless, and sooooooo timely
Auction Heaven in ‘07 misses a few:
5. taxes intake will be lower due to lower valuation and bankrupt [ex-]owners (or FB) unable to pay their taxes, so either the local governments will cut services or raise the tax rates (or both). Note that the home builders may struggle to pay their taxes, as well, esp. if they go under! So much for all those new developments.
6. Pension disclosures have to be made by local governments starting later this year (see http://www.gasb.org/news/nr080204.html ). This will be painful for many governments which are dependent on property taxes. If this cause their bond ratings to drop, it’ll add more pain to #5. San Diego isn’t the only one struggling with pensions….
7. Unknown: what will foreingers do to the dollar: the bond market will be interesting to see, starting tomorrow….
The biggest unknown is: what will the fed do? 9/11 “victims” got millions and Katrina “victims” are getting their handouts so will the FB get relief, too?
Pismobear,
Great question… don’t know the answer to that one, however- this is kind of quirky-
I was one of probably at least a dozen that tipped NewsPress writer Maria Zate to the CNN Money article that stated that Santa Barbara was 86% overvalued. Two days later she runs the story in the local News Press-
but a few days later when I e-mailed to tip her about the firestorm started on this Blog Site (from that article posted by Ben)… my email came back “undeliverable”.
Probably a coincidence. I double and triple checked her the email address, and I had done it correct.
Hmmmm maybe she had enough “tips” from SB BubbleBeliever??? Dunno…
I doubt it, as SHE seems like the only one in Santa Barbara that has the BALLS (figuratively speaking) to report the noticable slide in sales and prices in 2006.
Would love to hear from others if they have heard anything.
pismobear says:
I doubt it, as SHE seems like the only one in Santa Barbara that has the BALLS (figuratively speaking) to report the noticable slide in sales and prices in 2006.
Would love to hear from others if they have heard anything.
__________________________________
pismo, auction,
I spoke with Maria Zate for around 10 minutes the day that article came out and she did tell me that the response to her article was heavy.and she directed me to some others to speak with as well. What I learned from them is that she is not the favorite person of the SBAR and those in the market there because she writes about things that they would rather be polished up for public consumtion or omitted alltogether hence the numbers withholding. I also forwarded this info to a producer I know at ABCNEWS (one of my clients) in LA and he said he would run it by the ‘big boss’. that’s how I left it.
Dont know if you’ll see this post as it’s the next day and I also dont know why it’s all in bold type……
“‘Sometimes people lose sight of the fact that real estate is cyclical,’ the realtors’ chief economist, David Lereah, said…..”
I want to thank all the posters on this blog for speaking truthfully and insightfully about the unsustainability of the soaring housing market in 2005.
I myself was close to jumping in “before being priced out forever” last summer. I look back and am thankful that I found reasonable, like-minded persons who saw this coming, and helped me avoid jumping in at or very near the peak (which I feel Summer 2005 here in CA).
David Lereah, and his puppets were singing a very different song at that time last year.
I too saw the big increase in OC homes for sale!
homepop!
I saw that as well! THAT was great! I was hoping to find a link to a video or transcript of that skit to post, but I guess it’s a little early….
From the Feb. 7 NAR release and Wapo story.
Existing-home sales are likely to decline 4.7 percent to 6.74 million this year, down from a record 7.07 million units in 2005, while new-home sales are expected to fall 8.5 percent to 1.17 million from a record 1.28 million in 2005; both sectors would see their third best year after the totals for 2005 and 2004. Housing starts are seen at 1.87 million units in 2006, down 9.3 percent from 2.06 million last year.
Construction too will tumble to levels not seen since before 2004, Lereah said. He forecast 2006 housing starts at 1.87 million units, down 9.3 percent from the 2.06 million in 2005 and 4.2 percent from the 1.96 million in 2004.
From the Jan. 10 NAR release
. New-home sales, which should be a record 1.29 million for 2005, are expected to decline 6.0 percent to 1.21 million in 2006 – that also would be the second best year in history. Total housing starts for 2005 are seen at 2.07 million units – the highest since setting a record 1972 – with a 6.6 percent slowing to 1.94 million this year.
Lereah revised downward in a big way in just a month.